Eos Energy Enterprises, Inc. [EOSE] Filings

10-Q 1 eose-20240630.htm 10-Q eose-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-39291

EOS ENERGY ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)


Delaware			84-4290188
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3920 Park Avenue	Edison	NJ	08820
(Address of Principal Executive Offices)			(Zip Code)

(732) 225-8400

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	EOSE	The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of common stock	EOSEW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had outstanding 216,708,398 shares of common stock as of August 1, 2024.

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		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	4
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and S ix Months Ended June 30, 2024 and 2023	6
	Unaudited Condensed Consolidated Statements of Shareholders’ Deficit for the Three and S ix Months Ended June 30, 2024 and 2023	7
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	9
	Notes to the Unaudited Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46

	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1a.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	50
Signatures		53

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FORWARD-LOOKING INFORMATION

All statements included in this Quarterly Report on Form 10-Q (“Quarterly Report”), other than statements or characterizations of historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions, as they relate to us, are intended to identify forward-looking statements. These statements appear in a number of places in this Quarterly Report and include statements regarding the intent, belief or current expectations of Eos Energy Enterprises, Inc. Forward-looking statements are based on our management’s beliefs, as well as assumptions made by and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Factors which may cause actual results to differ materially from current expectations include, but are not limited to:

•changes adversely affecting the business in which we are engaged;

•our ability to forecast trends accurately;

•our ability to generate cash, service indebtedness and incur additional indebtedness;

•our ability to raise financing in the future;

•our customer’s ability to secure project financing;

•risks associated with the Credit Agreement (defined below), including risks of default, dilution of outstanding Common Stock, consequences for failure to meet milestones and contractual lockup of shares;

•the amount of final tax credits available to our customers or to Eos Energy Enterprises, Inc. pursuant to the Inflation Reduction Act;

•uncertainties around our ability to meet the applicable conditions precedent and secure final approval of a loan in a timely manner or at all from the Department of Energy, Loan Programs Office, or the timing of funding and the final size of any loan that is approved;

•the possibility of a government shutdown while we work to meet the applicable conditions precedent and finalize loan documents with the U.S. Department of Energy Loan Programs Office or while we await notice of a decision regarding the issuance of a loan from the Department of Energy Loan Programs Office;

•our ability to continue to develop efficient manufacturing processes to scale and to forecast related costs and efficiencies accurately;

•fluctuations in our revenue and operating results;

•competition from existing or new competitors;

•our ability to convert firm order backlog and pipeline to revenue;

•risks associated with security breaches in our information technology systems;

•risks related to legal proceedings or claims;

•risks associated with evolving energy policies in the United States and other countries and the potential costs of regulatory compliance;

•risks associated with changes to the U.S. trade environment;

•our ability to maintain the listing of our shares of common stock on NASDAQ;

•our ability to grow our business and manage growth profitably, maintain relationships with customers and suppliers and retain our management and key employees;

•risks related to adverse changes in general economic conditions, including inflationary pressures and increased interest rates;

•risk from supply chain disruptions and other impacts of geopolitical conflict;

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•changes in applicable laws or regulations; and

•other factors detailed under the section entitled “Risk Factors” herein.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements and, except as required by law, the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. See also Part I, Item 1A, “Risk Factors” disclosures contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for additional discussion of the risks and uncertainties that could cause the Company’s actual results to differ materially from those expressed or implied in its forward-looking statements.

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Part I - Financial Information


EOS ENERGY ENTERPRISES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)


	June 30, 2024		December 31, 2023

ASSETS
Current assets:
Cash and cash equivalents	$	52,454	$	69,473
Restricted cash	2,625		3,439
Loan commitment assets	76,091		—
Accounts receivable, net	4,561		3,387
Inventory, net	17,839		17,070
Vendor deposits	5,458		7,161

Contract assets, current	11,107		6,386
Prepaid expenses	1,288		1,082
Grant receivable	1,493		3,256
Other receivables	7,500		7,500
Other current assets	3,130		3,577
Total current assets	183,546		122,331

Property, plant and equipment, net	50,595		37,855
Intangible assets, net	260		295
Goodwill	4,331		4,331


Operating lease right-of-use asset, net	3,425		4,033
Long-term restricted cash	2,500		11,755
Other assets, net	4,119		5,892
Total assets	$	248,776	$	186,492


LIABILITIES
Current liabilities:
Accounts payable	$	24,112	$	20,540
Accrued expenses	34,747		32,332
Operating lease liability, current	1,657		1,496
Long-term debt, current	3,041		3,332

Contract liabilities, current	4,814		3,070
Other current liabilities	117		100
Total current liabilities	68,488		60,870

Long-term liabilities:
Operating lease liability	2,478		3,350
Long-term debt	1,068		88,002
Notes payable - related party	149,172		112,525

Contract liabilities, long-term	4,388		3,540
Warrants liability	32,502		27,461
Warrants liability - related party	141,296		—
Other liabilities	86		1,544
Total long-term liabilities	330,990		236,422
Total liabilities	399,478		297,292

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EOS ENERGY ENTERPRISES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)


	June 30, 2024		December 31, 2023


COMMITMENTS AND CONTINGENCIES (NOTE 16)

Series A-1 Preferred Stock, $0.0001 par value, 59 shares authorized, 59 shares issued and outstanding	40,117		—

SHAREHOLDERS' DEFICIT
Common stock, $0.0001 par value, 600,000,000 shares authorized, 216,491,215 and 199,133,827 shares outstanding on June 30, 2024 and December 31, 2023, respectively	23		21
Preferred stock, $0.0001 par value, 1,000,000 shares authorized, no shares outstanding on June 30, 2024 and December 31, 2023	—		—
Additional paid in capital	759,881		765,018
Accumulated deficit	(950,726)		(875,846)
Accumulated other comprehensive income	3		7
Total shareholders' deficit	(190,819)		(110,800)
Total liabilities, preferred stock and shareholders' deficit	$	248,776	$	186,492

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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EOS ENERGY ENTERPRISES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue
Total revenue	$	898	$	249	$	7,499	$	9,084

Costs and expenses
Cost of goods sold	14,121		11,246		42,350		38,186
Research and development expenses	4,250		5,026		9,450		10,471
Selling, general and administrative expenses	11,293		13,138		25,535		27,093
Loss from write-down of property, plant and equipment	271		5,436		336		6,196

Total costs and expenses	29,935		34,846		77,671		81,946

Operating loss	(29,037)		(34,597)		(70,172)		(72,862)

Other (expense) income
Interest expense, net	(3,515)		(4,886)		(7,782)		(9,715)
Interest expense - related party	(4,912)		(14,758)		(9,763)		(28,513)
Change in fair value of debt - related party	(240)		—		(240)		—
Change in fair value of warrants	(7,941)		(59,207)		(5,041)		(59,363)
Change in fair value of derivatives - related parties	(47,727)		(15,426)		(47,193)		(28,360)

Gain (loss) on debt extinguishment	68,478		(1,876)		68,478		(3,510)
Other expense	(3,270)		(878)		(3,134)		(895)
Loss before income taxes	$	(28,164)	$	(131,628)	$	(74,847)	$	(203,218)
Income tax expense	8		2		33		12
Net loss attributable to shareholders	$	(28,172)	$	(131,630)	$	(74,880)	$	(203,230)

Accretion of Series A-1 Preferred Stock	(23,671)		—		(23,671)		—
Net loss attributable to common shareholders	$	(51,843)	$	(131,630)	$	(98,551)	$	(203,230)
Other comprehensive income (loss)
Foreign currency translation adjustment, net of tax	1		2		(4)		3
Comprehensive loss attributable to common shareholders	$	(51,842)	$	(131,628)	$	(98,555)	$	(203,227)

Basic and diluted loss per share attributable to common shareholders
Basic	$	(0.25)	$	(1.12)	$	(0.48)	$	(1.99)
Diluted	$	(0.25)	$	(1.12)	$	(0.48)	$	(1.99)

Weighted average shares of common stock
Basic	211,137,189		117,320,802		206,225,126		102,106,041
Diluted	211,137,189		117,320,802		206,225,126		102,106,041

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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EOS ENERGY ENTERPRISES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY
(In thousands, except share and per share amounts)


	Common Stock			Additional Paid in capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
	Shares	Amount

Balances on March 31, 2023	95,222,670	$	10	$	542,326	$	7	$	(717,940)	$	(175,597)
Stock-based compensation	—	—		2,304		—		—		2,304
Exercise of stock options	200,000			268						268
Release of restricted stock units	598,127	—		—		—		—		—
Cancellation of shares used to settle payroll tax withholding	(43,354)	—		(106)		—		—		(106)
Issuance of common stock	31,332,517	4		75,214		—		—		75,218
Foreign currency translation adjustment	—	—		—		2		—		2
Net loss	—	—		—		—		(131,630)		(131,630)
Balances on June 30, 2023	127,309,960	$	14	$	620,006	$	9	$	(849,570)	$	(229,541)

Balances on March 31, 2024	206,779,447	$	22	$	774,857	$	2	$	(922,554)	$	(147,673)
Stock-based compensation	—	—		1,857		—		—		1,857
Release of restricted stock units	370,586	—		—		—		—		—
Cancellation of shares used to settle payroll tax withholding	(46,359)	—		(43)		—		—		(43)
Issuance of common stock	9,387,541	1		6,881		—		—		6,882
Series A-1 Preferred Stock accretion to redemption value	—	—		(23,671)		—		—		(23,671)
Foreign currency translation adjustment	—	—		—		1		—		1
Net loss	—	—		—		—		(28,172)		(28,172)
Balances on June 30, 2024	216,491,215	$	23	$	759,881	$	3	$	(950,726)	$	(190,819)

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EOS ENERGY ENTERPRISES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(In thousands, except share and per share amounts)


	Common Stock			Additional Paid in capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
	Shares	Amount

Balances on December 31, 2022	82,653,781	$	9	$	513,614	$	6	$	(646,340)	$	(132,711)
Stock-based compensation	—	—		5,667		—		—		5,667
Exercise of stock options	200,000	—		268		—		—		268
Release of restricted stock units	1,513,333	—		—		—		—		—
Cancellation of shares used to settle payroll tax withholding	(290,071)	—		(451)		—		—		(451)
Issuance of common stock	43,232,917	5		100,908		—		—		100,913

Foreign currency translation adjustment	—	—		—		3		—		3
Net loss	—	—		—		—		(203,230)		(203,230)
Balances on June 30, 2023	127,309,960	$	14	$	620,006	$	9	$	(849,570)	$	(229,541)

Balances on December 31, 2023	199,133,827	$	21	$	765,018	$	7	$	(875,846)	$	(110,800)
Stock-based compensation	—	—		4,798		—		—		4,798

Release of restricted stock units	1,028,191	—		—		—		—		—
Cancellation of shares used to settle payroll tax withholding	(298,326)	—		(351)		—		—		(351)
Issuance of common stock	16,627,523	2		14,087		—		—		14,089

Series A-1 Preferred Stock accretion to redemption value	—	—		(23,671)		—		—		(23,671)
Foreign currency translation adjustment	—	—		—		(4)		—		(4)
Net loss	—	—		—		—		(74,880)		(74,880)
Balances on June 30, 2024	216,491,215	$	23	$	759,881	$	3	$	(950,726)	$	(190,819)

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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EOS ENERGY ENTERPRISES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share and per share amounts)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities
Net loss	$	(74,880)	$	(203,230)
Adjustment to reconcile net loss to net cash used in operating activities
Stock-based compensation	4,798		5,667
Depreciation and amortization	2,568		5,151
(Gain) loss on debt extinguishment	(68,478)		3,510
Loss from write-down of property, plant and equipment	336		6,196
Amortization of right-of-use assets	608		481

Non-cash interest expense	5,117		2,469
Non-cash interest expense - related party	8,987		28,495
Change in fair value of debt - related party	240		—
Change in fair value of warrants	5,041		59,363
Change in fair value of derivatives - related parties	47,193		28,360


Other	3,264		640
Changes in operating assets and liabilities:
Prepaid expenses	(206)		939
Inventory	(769)		6,630
Accounts receivable	(1,174)		155
Vendor deposits	837		(5,423)
Contract assets	(4,552)		(106)
Grant receivable	1,763		(826)
Accounts payable	543		(16,196)
Accrued expenses	(1,977)		5,184


Operating lease liabilities	(711)		(540)
Contract liabilities	2,592		(1,471)

Other	2,053		(1,030)
Net cash used in operating activities	(66,807)		(75,582)

Cash flows from investing activities
Purchases of intangible assets	(8)		—
Purchases of property, plant and equipment	(10,291)		(10,100)
Net cash used in investing activities	(10,299)		(10,100)

Cash flows from financing activities
Principal payments on finance lease obligations	(4)		(15)
Proceeds from exercise of options	—		355

Proceeds from issuance of convertible notes - related party	—		48,050
Payment of debt issuance costs - related party	(12,238)		(1,116)
Proceeds from Credit and Securities Purchase Transaction	70,075		—
Payment of equity issuance costs	—		(2,080)
Payoff of Senior Secured Term Loan	(19,946)		—

Repayment of equipment financing facility	(1,601)		(1,381)

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EOS ENERGY ENTERPRISES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share and per share amounts)


	Six Months Ended June 30,
	2024		2023
Proceeds from issuance of common stock	14,089		—
Proceeds from issuance of common stock and warrants - related party	—		49,250

Repurchase of shares from employees for income tax withholding purposes	(351)		(451)
Net cash provided by financing activities	50,024		92,612

Effect of exchange rate changes on cash, cash equivalents and restricted cash	(6)		3

Net decrease in cash, cash equivalents and restricted cash	(27,088)		6,933
Cash, cash equivalents and restricted cash, beginning of the period	84,667		31,223
Cash, cash equivalents and restricted cash, end of the period	$	57,579	$	38,156

Non-cash investing and financing activities
Accrued and unpaid capital expenditures	$	3,578	$	—
Issuance of convertible notes for interest paid in kind	5,783		4,915

Right-of-use operating lease assets in exchange for lease liabilities	—		363
Issuance of common stock upon settlement of Yorkville convertible notes	—		51,023

Accrued and unpaid capitalized internal-use software	—		130

Supplemental disclosures
Cash paid for interest	$	4,131	$	7,434

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

1.Overview

Nature of Operations

Eos Energy Enterprises, Inc. (the “Company,” “we,” “us,” “our,” and “Eos”) designs, develops, manufactures and markets innovative energy storage solutions for utility-scale, microgrid and commercial & industrial (“C&I”) applications. Eos developed a broad range of intellectual property with multiple patents covering unique battery chemistry, mechanical product design, energy block configuration and a software operating system (Battery Management System). The Company has only one operating and reportable segment.

Liquidity and Going Concern

As a growth company in the early commercialization stage of its lifecycle, Eos is subject to inherent risks and uncertainties associated with the development of an enterprise. In this regard, substantially all of the Company’s efforts to date have been devoted to the development and manufacturing of battery energy storage systems and complimentary products and services, recruitment of management and technical staff, deployment of capital to expand the Company’s operations to meet customer demand and raising capital to fund the Company’s development. However, as a result of these efforts, the Company has incurred significant losses and negative cash flows from operations since its inception and expects to continue to incur such losses and negative cash flows for the foreseeable future until such time that the Company can reach a scale of profitability to sustain its operations.

In order to execute its development strategy, the Company has historically relied on outside capital through the issuance of equity, debt and borrowings under financing arrangements (collectively “outside capital”) to fund its cost structure. While the Company believes its recent entry into new credit facilities as discussed below has significantly improved its capital position and provides a path to sustainable operations and profitability, there can be no assurance the Company will be able to achieve such profitability or do so in a manner that does not require additional outside capital. Moreover, while the Company has historically been successful in raising outside capital, there can be no assurance the Company will be able to continue to obtain outside capital in the future or do so on terms that are acceptable to the Company, should it be needed.

As discussed in Note 3, Credit and Securities Purchase Transaction, on June 21, 2024, the Company entered into a Credit and Guaranty Agreement (the “Credit Agreement”) with CCM Denali Debt Holdings, LP., an affiliate of Cerberus Capital Management LP, (the “Lender”, also acting as administrative and collateral agent) to provide:

1.a secured multi-draw facility in an aggregate principal amount of $210,500 (the “Delayed Draw Term Loan”) to be made in four installments ($75,000, the Initial Draw which was funded on June 21, 2024, and the remaining three tranches which may be drawn in the amounts of $30,000, $65,000 and $40,500 on August 31, 2024, October 31, 2024, and January 31, 2025, respectively, upon the Company’s achievement of certain applicable funding milestones), and

2.a $105,000 revolving credit facility available to be drawn by the Company beginning June 21, 2026 at the Lender’s sole discretion and only after the Delayed Draw Term Loan is fully funded.

In addition, Eos utilized a portion of the proceeds of the Delayed Draw Term Loan to extinguish its existing $100,000 Senior Secured Term Loan, resulting in a gain on debt extinguishment in the amount of $68,478.

As of the date the accompanying Unaudited Condensed Consolidated Financial Statements were issued (the “issuance date”), management evaluated the significance of the following negative financial conditions in accordance with Accounting Standard Codification 205-40, Going Concern:

•Since its inception, the Company has incurred significant losses and negative cash from operations in order to fund its development. During the six months ended June 30, 2024, the Company incurred a net loss of $74,880, incurred negative cash flows from operations of $66,807 and had an accumulated deficit of $950,726 as of June 30, 2024.

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

1. Overview (cont.)

•As of June 30, 2024, the Company had $52,454 of unrestricted cash and cash equivalents available to fund the Company’s operations and working capital of $115,058,which includes loan commitment assets of $76,091 classified as current assets on the Unaudited Condensed Consolidated Balance Sheets.

•Additionally, the Company continues to progress through the Department of Energy (DOE) Loan Programs Office’s (LPO) process for its Title XVII loan. In August 2023, the DOE issued a conditional commitment letter to the Company for a loan of an aggregate principal amount of up to $398,600 through the DOE’s Clean Energy Financing Program. Certain technical, legal and financial conditions must be met and due diligence to the satisfaction of the DOE must be completed before the DOE enters into definitive financing documents with the Company and funds the loan. The Company continues to work with the DOE to meet these conditions and close the loan, however, there can be no assurance that the Company will be able to secure such a loan or on terms that are acceptable to the Company.

•The Company is required to remain in compliance with certain quarterly financial covenants under its Credit Agreement. These financial covenants include (a) minimum EBITDA, (b) Revenue, and (c) a Liquidity covenant (collectively, the “financial covenants”). While the Company was in compliance with these covenants as of June 30, 2024, the Company may be unable to remain in compliance with these covenants as of September 30, 2024, and thereafter, absent the Company’s ability to draw under the Delayed Draw Term Loan or secure a waiver from the Lender. In the event the Company is unable to remain in compliance with the financial covenants and the other nonfinancial covenants required by Credit Agreement and the Company is further unable to cure such noncompliance or secure a waiver, the Lender may, at its discretion, exercise any and all of its existing rights and remedies, which may include, among other things, entering into a forbearance agreement with the Company and/or asserting its rights in the Company’s assets securing the loan. Moreover, the Company’s other lenders may exercise similar rights and remedies under the cross-default provisions of their respective borrowing arrangements with the Company.

•In the event the Company does not achieve the funding milestones, the Lender chooses not to continue funding, and the Company’s ongoing efforts to raise additional outside capital prove unsuccessful, the Company will be unable to meet its obligations as they become due over the next twelve months beyond the issuance date. In such an event, management will be required to seek other strategic alternatives, which may include, among others, a significant curtailment in the Company’s operations, a sale of certain of the Company’s assets, a sale of the entire Company to strategic or financial investors and/or allowing the Company to become insolvent.

These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared on the basis that the Company will continue to operate as a going concern, which contemplates that the Company will be able to realize assets and settle liabilities and commitments in the normal course of business for the foreseeable future. Accordingly, the accompanying Unaudited Condensed Consolidated Financial Statements do not include any adjustments that may result from the outcome of these uncertainties.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its 100% owned, direct and indirect subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All intercompany transactions and balances have been eliminated in the preparation of the Unaudited Condensed Consolidated Financial Statements. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The interim financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in our 2023 Annual Report on Form 10-K. These interim results are not necessarily indicative of results for the full year.

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (cont.)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Series A-1 Preferred Stock

The Company’s Series A-1 Preferred Stock that was issued as part of the Credit and Securities Purchase Transaction becomes redeemable based upon the passage of time and therefore meets the criteria to be classified within temporary equity. Management has elected to recognize changes in the redemption value pursuant to ASC 480-10-S99-3A-15(b). As a result, the Company will remeasure the Series A-1 Preferred Stock to the maximum redemption value at each reporting date but will never be adjusted below its initial carrying value. Adjustments are reflected in Additional paid in capital on the Company’s Unaudited Condensed Consolidated Balance Sheets.

Production Tax Credits under Internal Revenue Code 45X (“PTC”)

Since the PTC is a refundable credit (i.e., a credit with a direct-pay option available), the PTC is outside the scope of ASC 740. Therefore, the Company accounts for the PTC under a government grant model. GAAP does not address the accounting for government grants received by a business entity that are outside the scope of ASC 740. The Company’s accounting policy is to analogize to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, under IFRS Accounting Standards. Under IAS 20, once it is reasonably assured that the entity will comply with the conditions of the grant, the grant money is recognized on a systematic basis over the periods in which the entity recognizes the related expenses or losses for which the grant money is intended to compensate. The Company recognizes grants once it is probable that both of the following conditions will be met: (1) the Company is eligible to receive the grant and (2) the Company is able to comply with the relevant conditions of the grant. The PTC is a non-monetary asset since the Company’s intention is to sell the tax credit to a third-party and is recorded at the value that is expected to be received from the sale in Other assets, net and Inventory, net on the Company’s Unaudited Condensed Consolidated Balance Sheets and is subsequently recognized in Cost of goods sold in the Unaudited Condensed Consolidated Statement of Operations when the inventory is sold. In the event the PTC is sold, upon the receipt of the cash payments, the Company will record offsets to Other assets, net. Differences in the recorded value of the PTC and the sale price will be recognized as an adjustment to Cost of goods sold in the Unaudited Condensed Consolidated Statement of Operations.

Fair Value Option

The Company has elected the option under ASC 825-10, Financial Instruments ("ASC 825"), to measure the Delayed Draw Term Loan (see Note 3. Credit and Securities Purchase Transaction) at fair value. The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. When the fair value option is elected for an instrument, unrealized gains and losses for such instrument is reported in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss at each subsequent reporting date. Upfront costs and fees related to items for which the fair value option is elected shall be recognized in earnings as incurred and not deferred. These amounts are included in Other expense in the Unaudited Condensed Consolidated Statement of Operations.

Recent Accounting Pronouncements

There were no new accounting standards or updates during the six months ended June 30, 2024 that would have a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements.

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

3. Credit and Securities Purchase Transaction

Credit and Guaranty Agreement (“Credit Agreement”)

Delayed Draw Term Loan

On June 21, 2024, the Company entered into the following agreements with CCM Denali Debt Holdings, LP, an affiliate of Cerberus Capital Management LP (herein after referred to as“Denali”, “Lender”, “Denali Lender”, “Holder”, “Purchaser”). As a result of this transaction, the Lender is deemed a related party. Pursuant to the Credit Agreement, the Lender has agreed to provide a $210,500 secured multi-draw facility to be made in four installments (the “Delayed Draw Term Loan”) as well as a $105,000 revolving credit facility (“Revolving Facility”), to be made available at the Lenders’ sole discretion and only if the Delayed Draw Term Loan is fully funded. On June 21, 2024 the initial $75,000 installment was funded (the “Initial Draw”). The Initial Draw is included in Notes payable - related party on the Unaudited Condensed Consolidated Balance Sheets and is measured at fair value (pursuant to the fair value option elected by the Company in accordance with ASC 825). See Note 13, Borrowings, for further discussion.

Delayed Draw Term Loan Commitments (“Loan Commitment Assets”)

Pursuant to the terms of the Credit Agreement, Denali has committed to fund to the Company, additional amounts up to $135,500 to be made available to the Company by the Lender in three tranches ($30,000, $65,000 and $40,500 on August 31, 2024, October 31, 2024 and January 31, 2025, respectively), subject to the achievement of certain performance milestones, and subject to terms and conditions set forth in the Credit Agreement. As of June 30, 2024, the Loan Commitment Assets amounted to $76,091 on the Company’s Condensed Consolidated Balance Sheets, which was the fair value on the issuance date.

Securities Purchase Agreement

On June 21, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with CCM Denali Equity Holdings, LP (the “Purchaser”).

SPA Warrant

Under the SPA, the Company issued a warrant to purchase 43,276,194 shares of Common Stock representing a collective ownership of 19.9% (the “SPA Warrant”). The SPA Warrant has a ten-year term and an exercise price of $0.01 per share. The SPA Warrant includes anti-dilutive rights, subject to certain excluded issuances, in the event any shares of Common Stock, options, warrants, convertible securities or other equity or equity equivalent securities payable in Common Stock are issued at a price per share of less than the fair market value (as defined in the Warrant) of a share of Common Stock on the issuance date of the Warrant, subject to adjustment. Until or unless the Company receives stockholder approval, the Company may not issue additional shares of Common Stock exceeding 19.99% of shares of Common Stock issued and outstanding as of the date of the Initial Draw (such percentage, as may be adjusted in accordance with the terms of the Warrant, the “Warrant Conversion Cap”) upon exercise of the Warrant, and is required to issue, at the option of the Lender, Series A Preferred Stock or additional warrants on Common Stock upon a draw under the Delayed Draw Credit Facility. Prior to stockholder approval, in lieu of receiving such anti-dilution protection, the liquidation value of the Series A-1 Preferred Stock (discussed below) will be proportionately increased to give effect to such anti-dilution protection. Following stockholder approval, the Warrant Conversion Cap increases to 49.9% of the number of shares of Common Stock issued and outstanding as of the applicable measurement date; provided that, following stockholder approval, the holder of the Warrant has the option to amend the Warrant Conversion Cap to any percentage less than 49.9%.

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

3. Credit Agreement and Securities Purchase Transaction (cont.)

The SPA Warrant is exercisable at the holder’s discretion for cash or on a cashless basis. The SPA Warrant is subject to automatic cashless exercise on the expiration date if the fair market value of one share is greater than the exercise price then in effect. Upon an acceleration under the Credit Agreement, the Company may be required to purchase the SPA Warrant from the holder at an amount equal to the closing sale price less the SPA Warrant price at the request of the holder. The SPA Warrant meets the criteria for liability classification under ASC 480 and is recognized at fair value with changes in fair value included in Change in fair value of derivatives - related parties in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

Contingent Warrants

Upon the achievement of performance milestones on dates specified in the Credit Agreement, the Company will receive additional funds and will issue at the option of the Lender, Preferred Stock (Series A-1 Preferred Stock, if prior to shareholder approval or Series B Preferred stock if after shareholder approval) or warrants on common stock (collectively “Contingent Warrants”) under the SPA in an amount equal to the applicable percentage, up to an aggregate of 33.0% ownership limitation on a fully diluted basis at such time the Delayed Draw Term Loan is fully drawn. The Contingent Warrants meet the criteria for liability classification under ASC 480. As such, the Contingent Warrants are included in Warrants liability - related party on the Unaudited Condensed Consolidated Balance Sheets at fair value as of June 30, 2024. The change in fair value of the Contingent warrants is included in Change in fair value of derivatives - related parties on the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. See Note 14, Warrants Liability, for further discussion of the SPA Warrant and Contingent Warrants.

Series A-1 Preferred Stock

On June 21, 2024, the Company filed with the Secretary of State of the State of Delaware the Series A-1 Certificate of Designation and issued 59 shares of Series A-1 Preferred Stock to satisfy the terms of the Credit Agreement. Under the terms of the Series A-1 Certificate of Designation, each share of Series A-1 Preferred Stock has an original issue price of $455,822.59 (the “A-1 Original Issue Price”) and a liquidation value, payable with the Common Stock, as if such shares were convertible into 541,357 shares, or an aggregate of 31,940,063 shares of Common Stock, subject to adjustment. The Series A-1 Preferred Stock is non-voting and non-convertible into Common Stock. Holders of the Series A-1 Preferred Stock are entitled to receive dividends or distributions on each share of Series A-1 Preferred Stock equal to dividends or distributions actually paid on each share of Common Stock, multiplied by the number of shares of Common Stock represented by the Series A-1 Preferred Stock Liquidation Value (as defined in the Series A-1 Certificate of Designation). If stockholder approval of the issuance of additional shares of Common Stock in connection with the SPA Warrant described above is obtained, then the Series A-1 Preferred Stock will become convertible into shares of Series B-1 Preferred Stock.

At any time after the fifth (5th) anniversary of the original issue date (which is the date on which the Series A-1 Certificate of Designation filed with the Secretary of State of Delaware), the outstanding shares of Series A-1 Preferred Stock held by any holder become redeemable for cash at the redemption price. The redemption price will be an amount per share equal to the greater of (i) A-1 Original Issue Price plus all accrued and unpaid dividends thereon, up to and including the date of redemption and (ii) the number of shares of Common Stock represented by the Series A-1 Liquidation Value (as defined in the Series A-1 Certificate of Designation) multiplied by the average of the closing sale price of the Common Stock for the five (5) business days immediately prior to the date of redemption plus all accrued and unpaid dividends thereon, up to and including the date of redemption. Subject to certain excluded issuances (as defined in the Series A-1 Certificate of Designation), the Series A-1 Preferred Stock is subject to anti-dilution protection in the number of shares of Common Stock represented by the liquidation preference. Additionally, the Series A-1 Preferred Stock provides that, to the extent any Warrant so requires, the number of shares of Common Stock represented by the Series A-1 Liquidation Value will be increased as set forth in the SPA Warrant.

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

3. Credit Agreement and Securities Purchase Transaction (cont.)

The terms of any additional shares of Series A Preferred Stock issued pursuant to the terms of the Credit Agreement and SPA will be substantially similar to the Series A-1 Preferred Stock, but for the number of shares constituting such shares, the original issue price of such series and the liquidation value of such shares. Series A Preferred Stock can only be issued prior to shareholder approval.

As of June 30, 2024, the Series A-1 Preferred Stock is classified as mezzanine equity on the Unaudited Condensed Consolidated Balance Sheets at its redemption value because it is probable of becoming redeemable. The Company recorded accretion of the Series A-1 Preferred Stock, which reduces additional paid-in capital, on the Unaudited Condensed Statements of Shareholders' Equity (Deficit).

Series B-1 Preferred Stock

If stockholder approval of the issuance of additional shares of Common Stock in connection with the SPA warrant described above is obtained, then the Series A-1 Preferred Stock will become convertible into shares of Series B-1. The Series B-1 Preferred Stock will contain substantially similar terms to the Series A-1 Preferred Stock except that each share of Series B-1 Preferred Stock will be convertible into 1,000,000 shares of Common Stock.

As of and for the three and six months ended June 30, 2024, there were no shares of Series B-1 Preferred Stock issued or outstanding.

Atlas Payoff Letter and Insurer Letter Agreement

On June 21, 2024 (the “Atlas Facility Termination Date”), the Company entered into a payoff letter agreement (the “Atlas Payoff Letter”), by and among the Company, ACP Post Oak Credit I LLC (“Atlas”) and the Atlas Lenders (as defined below) relating to the Company’s Senior Secured Term Loan (see Note 13, Borrowings), dated as of July 29, 2022 (the “Atlas Credit Agreement”), by and among the Company and Atlas, as lender, administrative agent and collateral agent, and the lenders from time to time party thereto (collectively with Atlas, the “Atlas Lenders”). Pursuant to the Atlas Payoff Letter, as of the Atlas Facility Termination Date, all outstanding obligations under the Atlas Credit Agreement and the related facility documents were deemed paid and satisfied in full and all security interests and other liens granted to or held by the Atlas Lenders were terminated and released. Under the Atlas Payoff Letter, the Company agreed to pay to the Atlas Lenders on the Atlas Facility Termination Date (a) approximately $11,900 (which was released from the interest escrow account maintained pursuant to the Atlas Credit Agreement, and (b) $8,000. Atlas also agreed, in lieu of amounts due from the Company, to receive a $1,000 participation in the Credit Agreement, as negotiated between Atlas and the Denali Lender. The Company has no obligation under the participation agreement between Atlas and the Lender. The payoff of the Senior Secured Term Loan resulted in a restructuring gain. These amounts are included in Gain (loss) on debt extinguishment on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss. See Note 13, Borrowings, for further discussion.

In connection with the termination of the Atlas Credit Agreement, the Company entered into an insurer letter agreement, dated as of June 21, 2024 (the “Insurer Letter Agreement”), with the insurance companies that issued insurance policies to certain Atlas Lenders in connection with the Atlas Credit Agreement (the “Atlas Insurers”) pursuant to which the Company and the Atlas Insurers agreed that the Company shall pay to the Atlas Insurers, subject to the terms and conditions of the Insurer Letter Agreement (i) on December 31, 2024, subject to the absence of certain events of default under the Credit Agreement, $3,000 and (ii) on June 30, 2025, subject to the absence of certain events of default under the Credit Agreement, $4,000. These amounts are included in Accrued expenses on the Unaudited Condensed Consolidated Balance Sheets.

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

4. Revenue Recognition

The Company primarily earns revenue from sales of its energy storage systems and services including installation, commissioning and extended warranty services. Product revenues, which are generally recognized at a point in time, and service revenues, which are generally recognized over time, are as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
Product revenue	$	597	$	249	$	7,097	$	8,924
Service revenue	301		—		402		160
Total revenues	$	898	$	249	$	7,499	$	9,084

For the three months ended June 30, 2024, the Company had one customer that accounted for 87.0% of total revenue; for the six months ended June 30, 2024, we had one customer that accounted for 88.0% of total revenue as the Company focused on the transition to the new manufacturing line.

For the three months ended June 30, 2023, the Company had one customer that accounted for 100.0% of total revenue; for the six months ended June 30, 2023, we had one customer that accounted for 97.8% of total revenue.

Contract assets and Contract liabilities

The following table provides information about contract assets and contract liabilities from contracts with customers. Contract assets, current, Contract liabilities, current and Contract liabilities, long-term are included separately on the Unaudited Condensed Consolidated Balance Sheets and contract assets expected to be recognized in greater than twelve months are included under Other assets, net.


	June 30, 2024		December 31, 2023
Contract assets	$	12,874	$	8,322
Contract liabilities	$	9,202	$	6,610

The Company recognizes contract assets for certain contracts in which revenue recognition performance obligations have been satisfied but invoicing to the customer has not yet occurred. Contract liabilities primarily relate to consideration received from customers in advance of the Company’s satisfying performance obligations under contractual arrangements. Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period.

Contract assets increased by $4,552 during the six months ended June 30, 2024 due to recognition of revenues for which invoicing has not yet occurred. Contract liabilities increased by $2,592 during the six months ended June 30, 2024, reflecting $863 of revenue recognized from customers and offset by $3,455 in customer advance payments.

Contract liabilities of $4,814 as of June 30, 2024 are expected to be recognized within the next twelve months and long-term contract liabilities of $4,388 are expected to be recognized as revenue in greater than twelve months. Contract assets of $11,107 as of June 30, 2024 are expected to be recognized within the next twelve months and long-term contract assets of $1,767 are expected to be recognized as accounts receivable in greater than twelve months.

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

4. Revenue Recognition (cont.)

Remaining Performance Obligations

Remaining performance obligations (“RPO”) represent the allocated transaction price of unsatisfied or partially unsatisfied performance obligations. The Company expects to recognize revenue related to the RPOs as the performance obligations are satisfied in accordance with the Company’s revenue recognition policy, which can be found in Note 2, Summary of Significant Accounting Policies, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

5. Cash, Cash Equivalents and Restricted Cash

Restricted cash - current consists of escrow deposits related to U.S. Custom Bonds insurance and escrow deposits related to our credit card program agreements.

Long-term restricted cash as of June 30, 2024 relates to a minimum liquidity requirement in the Credit and Guaranty Agreement. Prior to the first tranche funding, the Company shall not permit liquidity at any time be less than $2,500. Once the first tranche is funded, the minimum liquidity requirement increases to $5,000 and once the Delayed Draw Term Loan is disbursed in full, or the first date any indebtedness is incurred through the DOE LPO, or the Company achieves positive EBITDA, the minimum liquidity requirement increases to $15,000.

Long-term restricted cash as of June 30, 2023 relates to interest that was required to be held in escrow per the Senior Secured Term Loan Agreement in an amount equal to the next four quarterly interest payments owed as of the balance sheet date. In connection with the June 2024 SPA and the Credit Agreement, the Company reached an agreement to payoff and terminate the Senior Secured Term Loan. Accordingly, the restricted cash held in the related escrow account was released (see Note 13, Borrowings and Note 3, Credit Agreement and Securities Purchase Transaction for further discussion).

The following table reconciles reported amounts from the Unaudited Condensed Consolidated Balance Sheets to Cash, Cash Equivalents and Restricted Cash reported within the Unaudited Condensed Consolidated Statements of Cash Flows:


	June 30, 2024		June 30, 2023
Cash and cash equivalents	$	52,454	$	23,243
Restricted cash - current	2,625		3,363
Long-term restricted cash	2,500		11,550
Total cash, cash equivalents and restricted cash	$	57,579	$	38,156

6. Inventory

The following table provides information about Inventory balances:


	June 30, 2024		December 31, 2023
Raw materials	$	17,509	$	15,487
Work-in-process	237		1,105
Finished goods	93		478
Total inventory, net	$	17,839	$	17,070

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

7. Property, Plant and Equipment, Net

The following table provides information about Property, plant and equipment, net balances:


	Estimated Useful lives	June 30, 2024		December 31, 2023
Equipment	5 to 10 years	$	49,233	$	20,559
Finance lease	5 years	504		504
Furniture	5 to 10 years	2,243		2,103
Leasehold improvements	Lesser of useful life/ remaining lease	8,302		7,718
Tooling	2 to 3 years	10,654		7,045
Construction in progress (“CIP”)		—		17,958
Total		70,936		55,887
Less: Accumulated depreciation		(20,341)		(18,032)
Total property, plant and equipment, net		$	50,595	$	37,855

Depreciation expense related to property, plant and equipment was $1,349 and $2,444 for the three months ended June 30, 2024 and 2023 and $2,524 and $5,111 for the six months ended June 30, 2024 and 2023, respectively.

The Company recorded a loss from write-down of property, plant and equipment of $271 and $5,436 for the three months ended June 30, 2024 and 2023, and $336 and $6,196 for the six months ended June 30, 2024 and 2023, respectively, mainly due to replacement of equipment, outsourcing of certain production processes and the shift in production from the Gen 2.3 battery system to the Z3™ battery system.

On June 28, 2024, the Company successfully began commercial operations on the first manufacturing line. Accordingly, the assets classified as construction in progress were reclassified to equipment, furniture, leasehold improvements and tooling in the table above. Included in construction in progress prior to the reclassification were capitalized interest costs of $991 and $1,841 for the three and six months ended June 30, 2024, respectively. There were no capitalized interest costs recognized for the three and six months ended June 30, 2023.

8. Intangible Assets

Intangible assets include patents valued at $400, which represents the cost to acquire the patents. These patents are determined to have useful lives and are amortized into the results of operations over ten years. The Company recorded amortization expense of $10 for the three months ended June 30, 2024 and 2023 and $20 for the six months ended June 30, 2024 and 2023, related to patents.

The Company capitalized $146 of costs for internal-use software, including $8 of costs capitalized during the six months ended June 30, 2024. The software has a useful life and is amortized into the results of operations over 3 years. The Company recorded amortization expense of $12 and $10 for the three months ended June 30, 2024 and 2023 and $24 and $20 for the six months ended June 30, 2024 and 2023, respectively, related to software.

9. Notes Receivable, Net and Variable Interest Entities (“VIEs”) Consideration

Notes receivable, net, relates to financing the Company offered to a customer. The Company reports the notes receivable at the principal balance outstanding less an allowance for losses. The estimate of credit losses is based on historical trends, the customer’s financial condition and current economic trends. The Company charges interest at a fixed rate and calculates interest income by applying the effective rate to the outstanding principal balance.

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

9. Notes Receivable, Net and Variable Interest Entities (“VIEs”) Consideration (cont.)

The Company had notes receivable, net, of $847 and $863 outstanding as of June 30, 2024 and December 31, 2023, respectively. These amounts are included in Other assets, net and Other current assets in the accompanying Unaudited Condensed Consolidated Balance Sheets. As of June 30, 2024 and December 31, 2023, the allowance for expected credit loss related to the notes receivable amounted to $37 and $2, respectively.

The customer to whom the Company offers financing through notes receivable is a VIE. However, the Company is not the primary beneficiary, because the Company does not have power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Therefore, the VIE is not consolidated into the Company’s consolidated financial statements. The maximum loss exposure is limited to the carrying value of notes receivable as of the balances sheet dates.

10. Accrued Expenses

Accrued expenses were as follows:


	June 30, 2024		December 31, 2023
Accrued payroll	$	7,181	$	4,553
Warranty reserve (2)	5,054		6,197
Accrued legal and professional expenses	9,725		10,710
Provision for contract losses	3,624		3,351
Insurance premium payable	—		2,605

Other (1)	9,163		4,916
Total accrued expenses	$	34,747	$	32,332

(1) Included in Other accrued expenses in the table above as of June 30, 2024 is $7,000 payable in accordance with the Insurer Letter Agreement.

See Note 3, Credit and Securities Purchase Transaction for further discussion.

(2) Refer to the table below for the warranty reserve activity for the three and six months ended June 30, 2024.

The following table summarizes warranty reserve activity:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Warranty reserve - beginning of period	$	5,513	$	3,972	$	6,197	3,836
Additions for current period deliveries	—		41		265		398
Changes in the warranty reserve estimate	(201)		708		(1,150)		708
Warranty costs incurred	(258)		(300)		(258)		(521)
Warranty reserve - end of period	$	5,054	$	4,421	$	5,054	$	4,421

11. Government Grants

Inflation Reduction Act of 2022 (“IRA”)

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 into law. The IRA has significant economic incentives for both energy storage customers and manufacturers for projects placed in service after December 31, 2022. Starting in 2023, there are PTC, that can be claimed on battery components manufactured in the U.S. and sold to U.S. or foreign customers. The tax credits available to manufacturers include a credit for ten percent of the cost incurred to make electrode active materials in addition to credits of $35 per kWh of capacity of battery cells and $10 per kWh of capacity of battery modules. These credits are cumulative, meaning that companies will be able to claim each of the available tax credits based on the battery components produced and sold through 2029, after which the PTC will begin to gradually phase down through 2032.

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EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

11. Government Grants (cont.)

In April 2024, the Department of the Treasury and the Internal Revenue Service (IRS) issued final regulations (Final Regulations) on the transferability of certain energy tax credits, pursuant to Section 6418 of the Internal Revenue Code of 1986, as amended, which was enacted as part of the Inflation Reduction Act of 2022. The Company has reviewed these regulations and believes they do not have a material impact on the financial statements.

The PTC is recorded as the applicable items are produced and sold and the conditions in the preceding paragraph are met.

During the second quarter of 2024, the Company entered into tax credit purchase agreements to sell and transfer all of the PTCs related to the production and sale of battery cells and battery modules produced in calendar years 2023 and in the first quarter of 2024, that were eligible to be claimed on the Company’s tax returns for the related years. The transferred tax credits were sold at 90% of their value and the cash purchase price of the PTCs was $3,430.

Cash was received from the buyer in April and June of 2024, after the completed registration requirements were filed through the IRS‑provided electronic portal, inclusive of registration numbers needed to claim the credit on the Buyer’s tax return. Upon the receipt of the cash payments, the Company recorded offsets to the PTC/Grant Receivable account. There were no differences between the recorded fair value of the PTC receivable and the amount of consideration received. Future differences, if any, will be recognized as an adjustment to cost of goods sold.

The Company recognized PTC credits of $125 and $45 for the three months ended June 30, 2024 and 2023 and $1,667 and $844 for the six months ended June 30, 2024 and 2023, respectively, as a reduction of cost of goods sold on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss. As of June 30, 2024 and December 31, 2023, grant receivable related to the PTC in the amount of $1,493 and $3,256, respectively, is recorded in the Unaudited Condensed Consolidated Balance Sheets.

12. Related Party Transactions

2021 Convertible Note Payable

In July 2021, the Company issued a convertible note in the aggregate principal amount of $100,000 to Spring Creek Capital, LLC, a wholly-owned, indirect subsidiary of Koch Industries, Inc. (the “2021 Convertible Note”). In connection with the 2021 Convertible Note, the Company paid $3,000 to B. Riley Securities, Inc., a related party, who acted as a placement agent. Refer to Note 13, Borrowings, for additional information.

AFG Convertible Notes

In January 2023, the Company issued and sold $13,750 of 26.5% Convertible Senior PIK Notes due in 2026 (“AFG Convertible Notes”) to Great American Insurance Company, Ardsley Partners Renewable Energy, LP, CCI SPV III, LP, Denman Street LLC, John B. Bending Irrevocable Children’s Trust, John B. Berding and AE Convert, LLC, a Delaware limited liability company managed by Russell Stidolph, a director of the Company (together, the “Purchasers”). In connection with the issuance and sale of the AFG Convertible Notes, the Company entered into an investment agreement (the “Investment Agreement”) with the Purchasers. Refer to Note 13, Borrowings, for additional information.

Table of Contents


EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

12. Related Party Transactions (cont.)

Standby Equity Purchase Agreement

On April 28, 2022, the Company entered into the Standby Equity Purchase Agreement (“SEPA”). Pursuant to the SEPA, the Company had the right, but not the obligation, to sell to Yorkville shares of its common stock at the Company’s request. On August 23, 2023, the Company and Yorkville terminated the SEPA, as amended, by mutual written consent. See Note 13, Borrowings for pre-advance loans in form of convertible promissory notes and Note 19, Shareholders' Deficit for additional information.

Credit and Securities Purchase Transaction

Pursuant to the terms and conditions of Credit and Securities Purchase Transaction, CCM Denali Equity Holdings, LP (“Denali”) is considered a related party as result of such transaction. Refer to Note 3, Credit and Securities Purchase Transaction for detailed discussion.

13. Borrowings

The Company’s debt obligations at carrying value consist of the following related and third-party borrowings:


		June 30, 2024				December 31, 2023
	Maturity Date	Borrowing Outstanding		Carrying Value*		Borrowing Outstanding		Carrying Value*
2021 Convertible Note Payable	June 2026	$	119,289	$	101,256	$	115,815	$	94,386
Delayed Draw Term Loan (at fair value)	June 2029	75,000		25,893		—		—
AFG Convertible Notes	June 2026	19,738		22,023		17,429		18,139
Notes payable - related party		214,027		149,172		133,244		112,525
Senior Secured Term Loan	March 2026	—		—		100,000		85,624
Equipment financing facility	April 2026	4,114		4,109		5,718		5,710
Total borrowings		218,141		153,281		238,962		203,859
Current portion		3,041		3,041		3,332		3,332
Total borrowings, non-current		$	215,100	$	150,240	$	235,630	$	200,527

*Carrying value includes unamortized deferred financing costs, unamortized discounts and fair value of embedded derivative liabilities, except for the Delayed Draw Term Loan, which is carried at fair value.

Delayed Draw Term Loan

On June 21, 2024, the Company entered into a Credit Agreement, under which the Lenders committed: (i) a $210,500 secured multi-draw facility (the “Delayed Draw Term Loan”) to be made in four tranches, and (ii) a $105,000 revolving credit facility beginning June 21, 2026, to be made available at the Lenders’ sole discretion and only if the Delayed Draw Term Loan is fully funded on terms and subject to conditions set forth in the Credit Agreement. On June 21, 2024, the Company borrowed an Initial Draw of $75,000 from the Delayed Draw Term Loan facility. The issuance was net of an original issue discount of $3,750. The Company used a portion of the loan proceeds to payoff and terminate all outstanding obligations under the Atlas Credit Agreement. The remaining three tranches may be drawn in the amounts of $30,000, $65,000 and $40,500 on August 31, 2024, October 31, 2024, and January 31, 2025, respectively, upon the Company’s achievement of certain applicable funding milestones. See Note 3, Credit Agreement and Securities Purchase Transaction for additional information on this transaction.

Table of Contents


EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

13. Borrowings (cont.)

Borrowings under the Credit Agreement bear interest at an annual rate equal to 15.0% per annum, subject to the following increases: (i) an additional 5.0% per annum upon the occurrence of an event of default under the Credit Agreement; and (ii) an additional 1.0% - 5.0% per annum for failure to obtain stockholder approval within 90 to 240 days following the signing of the Credit Agreement. The Company’s may elect to add accrued and unpaid interest on the loans to the principal amount of the loans (capitalized interest). Each tranche under the Delayed Draw Term Loan is subject to a 5% original issue discount payable at the time of each draw. Borrowings under the Credit Agreement are subject to certain fees, including (i) an exit fee equal to 5.0% of the aggregate principal amount of Loans, or Revolving Loans being paid, repaid, prepaid, refinanced or replaced in a prepayment event, (ii) a make-whole payment for certain prepayments prior to June 21, 2027 and (iii) a prepayment premium for any prepayments prior to the scheduled maturity date.

The Credit and Guaranty Agreement includes a minimum liquidity requirement under which the Company shall not permit liquidity at any time be less than $2,500, prior to the first tranche funding. Once the first tranche is funded, the minimum liquidity requirement increases to $5,000 and once the Delayed Draw Term Loan is disbursed in full, or the first date any indebtedness is incurred through the DOE LPO, or the Company achieves positive EBITDA, the minimum liquidity requirement increases to $15,000.

The facilities are scheduled to mature on the earlier of (i) the date that is five years after the signing of the Credit Agreement and (ii) 91 days prior to the maturity of certain of the Company’s outstanding convertible notes.

Milestones

In the event the Company fails to achieve any milestones on any predetermined tranche date or the one additional milestone measurement date, the Company will not receive the specific tranche unless waived by the Lenders, and will be subject to a penalty represented by an up to 4.0% increase in the applicable percentage at each missed milestone measurement date, which could result in the issuance of additional shares of Preferred Stock or Warrants up to an applicable percentage increase of up to 16.00% for all missed milestones, or up to a 49.0% overall applicable percentage taking into account the 33.0% applicable percentage. If the Company fails to achieve an interim milestone, but then subsequently achieves the final milestone for that particular category, the incremental penalty equity related to that milestone category is returned to the Company.

Debt Covenants

The facilities include various affirmative and negative covenants applicable to the Company including, among others, (i) meeting certain minimum EBITDA and revenue metrics, measured quarterly, and maintaining certain minimums of liquid cash with accounts controlled by the agent, (ii) reporting and information covenants including the delivery of annual, quarterly and monthly financial statements, daily cash reports, annual financial plans and forecasts with weekly progress reports and updates, (iii) monthly meetings with the Lenders and the engagement of advisors and consultants requested by the Lenders, and (iv) restrictions on business and activities including debt incurrence, asset dispositions, distributions, investments, and modifications to or terminations of various material contracts. The facilities are subject to certain events of default which can be triggered by, among other things, (i) breach of payment obligations and other obligations and representations in the Credit Agreement nor related documents, (ii) default under other debt facilities with a principal above a predetermined amount, (iii) failure to perform or comply with certain covenants in the Credit Agreement, (iv) entry into a decree or order for relief in respect of the Company or any of its subsidiaries in an involuntary case under the Bankruptcy Code of the United States or under any other debtor relief law, (v) any money judgment, writ or warrant of attachment or similar process involving in the aggregate at any time an amount in excess of $2,500, (vi) any order, judgement or decree entered against the Company or the Guarantors decreeing the dissolution or split up of such entity, (vii) the failure of the Common Stock to be listed on an internationally recognized stock exchange in the United States and (viii) a change of control. The Company was in compliance with these covenants as of June 30, 2024.

Table of Contents


EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

13. Borrowings (cont.)

The Company elected the fair value option to account for the Delayed Draw Term Note for operational ease. The financial liability was initially measured at its issue-date fair value and is subsequently remeasured at fair value on a recurring basis at each reporting period date. The Initial Draw fair value was $25,653 at issuance and $25,893 at June 30, 2024, for which a loss of $240 was recognized for the three and six months ended on June 30, 2024 in Change in fair value of debt - related party on the Unaudited Condensed Consolidated Statements of Operations. The Company did not separately report interest expense attributable to the Delayed Draw Term Loan because such interest was included in the determination of the fair value of the Note. See Note 15, Fair Value Measurement for the assumptions used to determine the fair value the Delayed Draw Term Loan at issuance and at June 30, 2024.

2021 Convertible Note Payable – Related Party

On July 6, 2021, the Company entered into an investment agreement with Spring Creek Capital, LLC, a wholly-owned, indirect subsidiary of Koch Industries, Inc. The investment agreement provides for the issuance and sale to Koch Industries of the 2021 Convertible Note in the aggregate principal amount of $100,000.

The 2021 Convertible Note contains an embedded derivative feature, which is presented on the Unaudited Condensed Consolidated Balance Sheets as a component of Notes payable - related party. See Note 15, Fair Value Measurement for the assumptions used to determine the fair value of the embedded derivative as of June 30, 2024 and December 31, 2023.

Interest expense recognized on the 2021 Convertible Note is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Contractual interest expense	$	1,737	$	1,637	$	3,474	$	3,274
Amortization of debt discount	1,588		1,250		3,119		2,457
Amortization of debt issuance costs	154		122		302		239
Total	$	3,479	$	3,009	$	6,895	$	5,970

The balances for the 2021 Convertible Note are as follows:


	June 30, 2024		December 31, 2023
Principal	$	119,289	$	115,815
Unamortized debt discount	(16,493)		(19,612)
Unamortized debt issuance costs	(1,593)		(1,895)
Embedded conversion feature	53		78
Aggregate carrying value	$	101,256	$	94,386

The Company is obligated to repay all contractual interest attributable to the 2021 Convertible Note in-kind on a semi-annual basis, in accordance with the terms under the Delayed Draw Term Loan. Therefore, for the semi-annual period ended June 30, 2024 and December 31, 2023, interest payable attributable for the 2021 Convertible Notes that was paid in kind, capitalized and added to the principal amount of the 2021 Convertible Notes was $3,474 and $3,373, respectively.

Table of Contents


EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

13. Borrowings (cont.)

AFG Convertible Notes - Related Party

On January 18, 2023, the Company entered into the Investment Agreement with the Purchasers relating to the issuance and sale to the Purchasers of $13,750 in aggregate principal amount of the Company’s AFG Convertible Notes. The AFG Convertible Notes bear interest at a rate of 26.5% per annum, which is entirely paid-in-kind (“PIK Interest”) semi-annually in arrears on June 30 and December 30. It is expected that the Notes will mature on June 30, 2026, subject to earlier conversion, redemption or repurchase. The AFG Convertible Notes are convertible into shares of the Company’s common stock, par value $0.0001 per share, based on an initial conversion price of approximately $1.67 per share subject to customary anti-dilution and other adjustments. The Company has the right to settle conversions in shares of common stock, cash, or any combination thereof.

The Conversion Option includes an exercise contingency, which requires the Company to obtain stockholder approval for conversions subject to the Exchange Cap. If stockholder approval of the issuance of additional shares of Common Stock is not obtained, following commercially reasonable efforts, the Company will be required to settle the conversion in excess of the Exchange Cap in cash. Since settlement in cash may be required in absence of stockholder approval, the embedded conversion feature fails the equity classification guidance in ASC 815 and is thus precluded from being classified in equity. Therefore, the embedded conversion feature is required to be bifurcated from the AFG Convertible Notes and accounted for at fair value at each reporting date, with changes in fair value recognized on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. The embedded derivative is presented on the Unaudited Condensed Consolidated Balance Sheets as a component of Notes payable - related party. The fair value of the embedded derivative was $5,361 and $4,345 as of June 30, 2024 and December 31, 2023, respectively.

The fair value of the AFG Convertible Notes at issuance was $16,623, which was greater than the proceeds received. The Company recorded the difference of $2,873 as interest expense for the six months ended June 30, 2023 on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss.

Interest expense recognized on the AFG Convertible Notes is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Contractual interest expense	$	1,154	$	860	$	2,309	$	1,639
Amortization of debt discount	218		210		436		358
Amortization of issuance costs	61		59		123		101
Total	$	1,433	$	1,129	$	2,868	$	2,098

The balances for the AFG Convertible Notes are as follows:


	June 30, 2024		December 31, 2023
Principal	$	19,738	$	17,429
Unamortized debt discount	(2,399)		(2,835)
Unamortized debt issuance costs	(677)		(800)
Embedded conversion feature	5,361		4,345
Aggregate carrying value	$	22,023	$	18,139

The Company is obligated to repay all contractual interest attributable to the AFG Convertible Notes in-kind on a semi-annual basis, in accordance with the terms of the Investment Agreement. Therefore, for the semi-annual period ended June 30, 2024 and December 31, 2023, interest payable attributable to the AFG Convertible Notes that was paid in kind, capitalized and added to the principal amount of the AFG Convertible Note was $2,309 and $2,039, respectively.

Table of Contents


EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

13. Borrowings (cont.)

Senior Secured Term Loan

On July 29, 2022, the Company entered into a $100,000 Senior Secured Term Loan Credit Agreement with Atlas Credit Partners (ACP) Post Oak Credit I LLC, as administrative agent for the lenders and collateral agent for the secured parties. The Senior Secured Term Loan was scheduled to mature on the earlier of (i) July 29, 2026 and (ii) 91 days prior to the current maturity date of the 2021 Convertible Note of June 30, 2026.

The outstanding principal balance of the Senior Secured Term Loan bears interest, at the applicable margin plus, at the Company’s election, either (i) the benchmark secured overnight financing rate (“SOFR”), which is a per annum rate equal to (y) the Adjusted Term SOFR plus 0.2616%, or (ii) the alternate base rate (“ABR”), which is a per annum rate equal to the greatest of (x) the Prime Lending Rate, (y) the NYFRB Rate (as defined in the agreement) plus 0.5% and (z) the SOFR. The applicable margin under the Credit Agreement is 8.5% per annum with respect to SOFR loans and 7.5% per annum with respect to ABR loans. Interest on the Senior Secured Term Loan accrues at a variable interest rate and interest payments are due quarterly.

Additionally, interest was required to be escrowed based on the principle outstanding. This amount was $11,755 at December 31, 2023. This escrowed and restricted cash was presented on a separate line item on the Unaudited Condensed Consolidated Balance Sheets as Long-term restricted cash. The agreements also contained customary affirmative and negative covenants. The Company was in compliance with all covenants prior to and at the time of the loan termination, as discussed below.

Termination of the Senior Secured Term Loan

On June 21, 2024, the Atlas Credit Agreement, and the subsequent commitment increase agreements thereto, which provided for a $100,000, were terminated pursuant to the terms of the Atlas Payoff Letter and the Insurer Letter Agreement, and all security interests and other liens granted to or held by the Atlas Lenders were terminated and released.

In accordance with the Atlas Payoff Letter, the Company agreed to payoff the Senior Secured Term Loan for (a) approximately $11,900 (which was released from the interest escrow account maintained pursuant to the Atlas Credit Agreement and (b) $1,000 for the account of Atlas; provided that Atlas agreed to accept a participation in the Credit Agreement in lieu of such $1,000 payment, and (c) $8,000. In accordance with the Insurer Letter Agreement, the Company shall pay to the Atlas Insurers (i) on December 31, 2024, subject to the absence of certain events of default under the Credit Agreement, $3,000 and (ii) on June 30, 2025, subject to the absence of certain events of default under the Credit Agreement, $4,000.

Absent termination, the Senior Secured Term Loan would have matured on the earlier of (i) July 29, 2026 and (ii) 91 days prior to the maturity of certain of the Company’s outstanding convertible notes. The aggregate principal amount of the Senior Secured Term Loan outstanding was $100,000 at the time of termination.

The Company accounted for the termination of the Senior Secured Term Loan in accordance with ASC 470-60, Troubled Debt Restructurings. As a result, the Company recognized a restructuring gain of $68,478 in the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss for the three and six months ended June 30, 2024.

See Note 3, Credit Agreement and Securities Purchase Transaction for additional information on this transaction.

The following table summarizes interest expense recognized:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Contractual interest expense	$	3,174	$	3,453	$	6,858	$	6,826
Amortization of debt discount	109		99		224		192
Amortization of debt issuance costs	963		873		1,980		1,695
Total	$	4,246	$	4,425	$	9,062	$	8,713

Table of Contents


EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

13. Borrowings (cont.)

The Senior Secured Term Loan balances are as follows:


	December 31, 2023
Principal	$	100,000
Unamortized debt discount	(1,459)
Unamortized debt issuance costs	(12,917)
Aggregate carrying value	$	85,624

Equipment Financing facility

The Company entered into an agreement on September 30, 2021 with Trinity Capital Inc. (“Trinity”) for a $25,000 equipment financing facility, the proceeds of which will be used to acquire certain manufacturing equipment, subject to Trinity’s approval. Each draw is executed under a separate payment schedule (a “Schedule”) that constitutes a separate financial instrument. The financing fees included in each Schedule are established through monthly payment factors determined by Trinity. Such monthly payment factors are based on the Prime Rate reported in The Wall Street Journal in effect on the first day of the month in which a Schedule is executed. The Company has drawn a portion of the facility as follows:


Date of Draw	Gross Amount of Initial Draw		Coupon Interest Rate	Debt Issuance Costs
September 2021	$	7,000	14.3%	$	175
September 2022	4,216		16.2%	96
Total Equipment Financing loans	$	11,216		$	271

As of June 30, 2024 and December 31, 2023, total equipment financing carrying value was $4,109 and $5,710, respectively of which $3,041 and $3,332 are recorded as a current liability on the Unaudited Condensed Consolidated Balance Sheets, respectively. Interest expense attributable to the equipment financing agreement was $178 and $387 for the three and six months ended June 30, 2024, respectively. Interest expense attributable to the equipment financing agreement was $292 and $609 for the three and six months ended June 30, 2023, respectively.

Yorkville Convertible Promissory Notes - Related Party

In December 2022, February 2023, March of 2023, and April 2023, the Company issued convertible promissory notes with an aggregate principal amount of $37,000 in a private placement to Yorkville under the second and third supplemental agreements to the SEPA. The fair values of the convertible promissory notes at issuance were greater than the proceeds received. Accordingly, the Company recorded the excess of fair value of these promissory notes over the proceeds as Interest expense - related party in the amount of $10,620 and $17,572, for the three and six months ended June 30, 2023, respectively, which is reflected in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

During the first half of 2023, Yorkville delivered Investor Notices requiring the Company to issue and sell an aggregate of 22,947,029 shares of common stock to Yorkville to offset all outstanding amounts owed to Yorkville under the outstanding convertible promissory notes. The Company recognized a loss on debt extinguishment from the issuance of common stock from the outstanding convertible promissory notes of $1,876 and $3,510 for the three and six months ended June 30, 2023, which is reflected in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

Table of Contents


EOS ENERGY ENTERPRISES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

13. Borrowings (cont.)

The conversion feature for each of the convertible promissory notes did not qualify for the scope exception to derivative accounting, therefore the conversion option was bifurcated from each convertible promissory note. The bifurcated derivatives were recorded at their initial fair value on the date of issuance and subject to remeasurement at the debt extinguishment date, with changes in fair value recognized as a realized gain or loss in the Unaudited Condensed Consolidated Statements of Operations. Net gains of $8,818 and $6,922 were recognized for the three and six months ended June 30, 2023.

As of December 31, 2023, there were no outstanding Yorkville convertible promissory notes.

14. Warrants Liability

The amount of warrants outstanding and fair value for all warrants as of June 30, 2024 and December 31, 2023 are as follows:


	June 30, 2024			December 31, 2023
	Number of Warrants Outstanding	Fair Value		Number of Warrants Outstanding	Fair Value
Warrants liability
IPO warrants	274,400	$	52	274,400	$	55
April 2023 warrants	16,000,000	7,368		16,000,000	6,276
May 2023 warrants	3,601,980	1,818		3,601,980	1,544
December 2023 warrants	34,482,759	23,264		34,482,759	19,586
Total	54,359,139	$	32,502	54,359,139	$	27,461
Warrants liability - related party
SPA Warrant	1	49,032		—	—
Contingent warrants(a)	—	92,264		—	—
Total	1	$	141,296	—	$

Eos Energy Enterprises, Inc. [EOSE] Filings
Eos Energy Enterprises, Inc. [EOSEW] Filings
10-Q	[2024-08-06]
10-Q	[2024-05-14]
10-K	[2024-03-04]
10-Q	[2023-11-06]
10-Q	[2023-08-14]
10-Q	[2023-05-09]
10-K	[2023-02-28]
10-Q	[2022-11-07]
10-Q	[2022-08-01]
10-Q	[2022-05-09]
10-K	[2022-02-25]
10-Q	[2021-11-10]
10-Q	[2021-08-12]
10-Q	[2021-05-13]
S-1	[2021-03-08]
10-K	[2021-02-26]
S-1	[2020-12-10]
10-Q	[2020-11-12]
S-1	[2020-10-28]
10-Q	[2020-08-12]
10-Q	[2020-06-26]
S-1	[2020-04-23]

Eos Energy Enterprises, Inc. [EOSE] Filings

Eos Energy Enterprises, Inc. [EOSEW] Filings